Eclipse Metals Limited (ASX:EPM): Does 24.1% EPS Drop In A Year Reflect The Long-Term Trend?
Understanding Eclipse Metals Limited’s (ASX:EPM) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Eclipse Metals is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. View our latest analysis for Eclipse Metals
How Did EPM’s Recent Performance Stack Up Against Its Past?
I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to assess many different companies on a similar basis, using new information. Eclipse Metals’s most recent earnings -A$1M, which, in comparison to the previous year’s figure, has become more negative. Since these figures are relatively short-term thinking, I’ve computed an annualized five-year figure for Eclipse Metals’s net income, which stands at -A$3M. This means that, while net income is negative, it has become less negative over the years.
Additionally, we can evaluate Eclipse Metals’s loss by researching what’s going on in the industry on top of within the company. Initially, I want to quickly look into the line items. Revenue growth over last couple of years has been negative at -11.37%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Scanning growth from a sector-level, the Australian oil, gas and consumable fuels industry has been growing average earnings growth of 57.50% over the prior year, and a more subdued 3.66% over the previous five years. This means whatever uplift the industry is enjoying, Eclipse Metals has not been able to reap as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will occur going forward, and when. The most valuable step is to assess company-specific issues Eclipse Metals may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Eclipse Metals to get a more holistic view of the stock by looking at:
1. Financial Health: Is EPM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Valuation: What is EPM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether EPM is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
